Opportunistic Trader Overnight Recap 1/2/2019

Welcome to 2019!

Overnight: Markets start the year lower as trade conflicts and growth fears remain the key drivers.
-Weak Chinese PMIs underscore global growth concerns (Caixin China PMI Manufacturing: 49.7 v 50.2e for its first contraction since May 2017; on Dec 30th China Dec Official Manufacturing PMI: 49.4 v 50.0e for its 1st contraction since July 2016 and lowest since Feb 2016.

European and Asian stock markets were mostly down overnight. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins, starting off the new year in inauspicious fashion. For the year 2018, the U.S. stock indexes lost around 5%, which is the worst performance in 10 years.

Global equities are reacting negatively to more weak economic data coming out of China, the world’s second-largest economy. The Caixin manufacturing purchasing managers index (PMI) fell to 49.7 in December, showing contraction in the sector (below 50.0) for the first time in a year and a half.

There was also some weaker economic data coming out of the European Union, to also un-nerve traders and investors.

Lingering concerns about the U.S. government shutdown that is well into its second week, and about the monetary policy of the Federal Reserve in the coming months, are also weighing on trader and investor sentiment to start the year.

The key outside markets today see the U.S. dollar index firmer. Meantime, Nymex crude oil prices are lower and trading around $45.00 a barrel.

U.S. economic data due for release Wednesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the U.S. manufacturing purchasing managers index (PMI) and the global manufacturing PMI.

U.S. STOCK INDEXES

March S&P 500 e-mini futures: Prices are lower in early U.S. trading today. Last week’s price action produced a bullish key reversal up that is one technical clue that a market bottom is in place. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at 2,500.00 and then at last week’s high of 2,523.00. Buy stops likely reside just above those levels. Downside support for active traders today is located at the overnight low of 2,452.25 and then at 2,425.00. Sell stops are likely located just below those levels.

March Nasdaq index December futures: Prices are solidly lower in early U.S. trading. Last week’s gains produced a bullish “key reversal” up on the daily bar chart, which is a chart clue that a market bottom is in place. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is above the 9-day. The 9-day average is below the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at 6,250.00 and then at 6,300.00. Buy stops likely reside just above those levels. On the downside, short-term support is seen at the overnight low of 6,154.00 and then at 6,100.00. Sell stops are likely located just below those levels.

U.S. TREASURY BONDS AND NOTES FUTURES

March U.S. T-Bonds: Prices are solidly higher and hit a contract high in early U.S. trading. Bulls are in solid near-term technical control. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day and 18-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term technical resistance is seen at the 147 even and then at 147 16/32. Buy stops likely reside just above those levels. Shorter-term support lies at 146 even and then at the overnight low of 145 19/32. Sell stops likely reside just below those levels.

March U.S. T-Notes: Prices are solidly higher in early U.S. trading and hit a contract high overnight. Bulls have the solid chart advantage. Shorter-term moving averages (4- 9- 18-day) are bullish early today. The 4-day moving average is above the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bullish early today. Shorter-term resistance lies at 122.16.0 and then at 122.24.0. Buy stops likely reside just above those levels. Shorter-term technical support lies at 122.00.0 and then at the overnight low of 121.26.0. Sell stops likely reside just below those levels.

U.S. DOLLAR INDEX

The March U.S. dollar index is slightly firmer in early U.S. trading after hitting a seven-week low overnight. Bulls are fading. The shorter-term moving averages for the dollar index are bearish early today, as the 4-day is below the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators for the dollar index are neutral early today. The dollar index finds shorter-term technical resistance at this week’s high of 96.070 and then at 96.500. Shorter-term support is seen at the overnight low of 95.375 and then at 95.000.

NYMEX CRUDE OIL

February Nymex crude oil prices are weaker in early U.S. trading. Prices last week hit a 17-month low of $42.36. Bears are still in solid overall near-term technical control. There not yet any strong, early chart clues that a market bottom is in place, but there is strong longer-term technical support at the $42.00 area that may have stopped the bleeding. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral early today. Look for buy stops to reside just above technical resistance at $46.00 and then at $47.00. Look for sell stops just below technical support at $44.00 and then at $43.00.

GRAINS

Grain futures were closed overnight. The grain market bears still have the overall near-term technical advantage. However, the recent upbeat news reports on U.S.-China trade relations could support the grains today. But the sell-off in the U.S. stock market today is a bearish element for the grains.